If you’ve ever wondered how companies like Zomato, Nykaa, or LIC suddenly started trading on the stock market, the answer lies in three letters — IPO.
An Initial Public Offering (IPO) is when a private company decides to go public by offering its shares to the general public for the first time. But IPOs are more than just headlines — they’re opportunities, risks, and stories of transformation.
Understanding IPOs: From Private to Public
Learn the IPO meaning in stock market
When a company launches an IPO, it’s essentially asking the public to invest in its growth. By doing so, it raises capital to expand operations, reduce debt, or improve infrastructure. For investors, it’s a chance to become part-owners of a growing brand.
Think of Infosys in the ’90s — those who invested in its IPO saw massive long-term returns. It wasn’t just a stock purchase; it was a ticket to India’s tech revolution.
The IPO Process: Step-by-Step
Get info on IPO process and book-building method
Here’s how the IPO journey unfolds:
- DRHP Filing: The company files a Draft Red Herring Prospectus with SEBI.
- Approval: SEBI reviews and clears the document.
- Book Building: The company sets a price band. Investors bid within this band (e.g., ₹95–₹105).
- Allotment: Shares are allotted based on demand.
- Listing: Finally, the shares are listed on stock exchanges like NSE and BSE.
Types of IPOs
There are two main types:
- Fixed Price IPO – The price is fixed before the issue.
- Book Built IPO – A price range is declared, and investors bid.
The Grey Market Buzz
Before listing, IPO shares sometimes trade unofficially in a grey market. This market reflects investor sentiment. A high Grey Market Premium (GMP) suggests strong demand.
Pre-IPO Investing: The Insider Angle
Get info on pre-IPO investing and NSE IPOs
Some savvy investors invest before the IPO — known as pre-IPO investing. This requires higher capital and risk appetite but can offer huge returns if the company performs well post-listing.
Final Thoughts: Should You Invest?
IPOs are not a guaranteed win, but with research, patience, and timing, they can be rewarding. Whether you’re a beginner or a market pro, staying informed is your best investment.
